The plan to kill the federal tax credit for monthly transit passes means money out of people's pockets, no question. But it shouldn't make much difference to transit use or the environment, writes David Reevely.Errol McGihon / Postmedia

Hate for the plan to kill the federal tax credit for monthly transit passes in July made unlikely allies when the Liberal government’s new budget came out Wednesday.

The move means money out of people’s pockets, no question. But it shouldn’t make much difference to transit use or the environment.

“I know they’re getting out of those so-called boutique tax credits but that was one I would have hoped they would have kept,” Mayor Jim Watson told reporters. Ottawa sells nearly 145,000 transit passes a month, and a 15-per-cent tax credit does make them obviously more appealing. Over a year, it’s like a 12-for-10 deal.

Conservative leadership candidate Lisa Raitt, to pick on one opposition critic, complained that cancelling the tax credit will take $345 from a constituent in her suburban Toronto riding who takes a GO Train to work every day.

Jim Flaherty introduced the transit tax credit in 2006 because he knew it gave a break to families and it encouraged transit use.

But if the point of the credit was to give a break to families, that’s not what the Tories said they were doing when they created it in 2006.

“The Government is committed to taking actions that will lead to a cleaner, healthier environment. Beginning this year, by making major investments in public transit infrastructure and by providing incentives to encourage its use, concrete actions will be taken that improve the environment and improve the lives of Canadians,” that budget said.

The transit-pass credit, which costs the government about $200 million a year, was in a section on environmental policies. Right after it was a new tax break for pulp and paper mills that generated electricity from their own goopy waste products.

The finance department had figured the tax credit would cut Canada’s greenhouse-gas emissions by about 110,000 tonnes of carbon dioxide a year by getting people out of private cars and into buses and trains. A year later, when the Tories were in a period of pretending to take climate change really seriously, Environment Canada claimed the cut would be 220,000 tonnes a year. A year after that, the Environment Canada had reduced its estimate to 35,000 tonnes a year. Nobody could give Vaughan plausible evidence for what any of those figures was based on.

“A consultant’s report commissioned by Finance Canada prior to the tax credit’s approval dismissed an alternative proposal because the cost to government would be excessive ($800 per tonne of greenhouse gases reduced) and the reduced fares would have little impact on transit usage,” the environment commissioner reported back then. On its own optimistic terms, the cost of the transit-pass credit was between $2,000 and $3,000 a tonne.

The Ontario government estimates its cap-and-trade plan will cost emitters $18 a tonne, which induces frothing in plenty of conservative critics. Even fairly radical carbon-tax advocates talk about charging $250 to $300 a tonne to really solve the climate-change problem.

So $2,000 a tonne is an insane price for emissions cuts. We’d be better off spending money on almost anything else.

Now that more time has gone by, the government has two statistical studies by outside researchers. One, led by the University of Ottawa’s Nic Rivers, used census answers to find the credit increased ridership in transit-equipped cities by a maximum of one per cent.

“As a strategy for reducing car traffic, changing public behaviour to promote increased mode-share for public transit and reducing emissions of greenhouse gases, we find that the policy is expensive and considerably less cost-effective than potential alternatives,” it found. To get people to drive less, we should charge road tolls, that study says, because there’s proof those work.

A different study used ridership figures and monthly pass sales to conclude that the effect on transit ridership was nil. It also found that people making $90,000 a year or more got a bigger share of the tax benefits than people making $25,000 to $30,000. To get the maximum benefit, you have to take transit every day — which means living in a city and having a stable job — buy a $100 pass to do it and be in the top tax bracket.

If the point was to help a narrow band of well-off transit users, well, that would have been a lot harder to defend back in 2006, but maybe at least it would have made sense on its own terms.

As it is, the people who got the money will miss it, but the rest of the country won’t much notice.

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